Don’t count Intel CEO Brian Krzanich among those who think the upcoming launch this year of Microsoft’s Windows 10 operating system will give the global PC market a significant boost.
Sure, worldwide PC shipments did rebound in 2014 after several years of declines, due in large part to Microsoft’s decision to end support of the aged Windows XP operating system, a move that forced some stubborn businesses to finally refresh their PCs.
However, a year later, the magic of the Windows XP refresh is waning, and according to Krzanich, while Microsoft’s release of Windows 10 may help a bit, the Intel CEO’s outlook is that the PC market will continue to muddle along at about an even pace over the next several years.
“We continue to see growth from [the Windows XP upgrade],” Krzanich said May 21 at the company annual shareholder meeting according to a transcript on Seeking Alpha. “As we entered this year, we are going through another transition, Windows 10 upgrades. And we are seeing some quarter-to-quarter pushing, but we continue to take a view of our long-term forecast. A long-term forecast is the PC market should be flat to slightly down mid-single digits over the long-term.”
The global PC market took a tumble after 2011 due to the popularity of other devices such as smartphones and tablets, and that took its toll on Intel, Advanced Micro Devices and other tech vendors with close ties to the PC space. Intel over the past has worked aggressively to extend its reach into new growth markets, including mobile devices, the Internet of things (IoT) and the data center—not only servers, but storage, networking and other appliances.
There have been some wins for Intel. The data center business grew more than 17 percent last year, and other areas like IoT saw revenue growth. However, the mobile business has been a struggle, losing about $4 billion last year while Intel paid subsidies to OEMs to use its silicon in their tablets. It worked—more than 46 million Intel-powered tablets shipped last year—and now Krzanich is looking to grow revenues.
However, the PC business still accounts for about 95 percent of Intel operating income and more than half of its revenue, so what happens in that market will continue to impact the chip maker. In the first quarter, revenue for Intel’s Client Computing Group fell 8 percent over the same period in 2014, though officials said they expect that gains in the data center, IoT and memory businesses will offset PC losses as the year progresses.
“Over that long haul, we think [the PC market] will be stable to down mid-single digits,” Krzanich said. “We’ve built that into all of our forecasts and we are offsetting that with growth in the data center and those other businesses. And that’s how we grow the company.”